Canadian bike shops beat big Canadian bike makers

On Monday, the Canadian government decided to back bicycle retailers and not impose an additional surtax on inported bicycles, a measure recommended by the Canadian International Trade Tribunal last year after entreaties from Raleigh Canada and Procycle. These two form the bulk of the Canadian Bicycle Manufacturers' Association and had called for protection from 'injurious imports' to protect jobs. But Canadian bike shops and suppliers of IBD-brands such as Brodie Bikes believed tariff protections would harm bike sales to smaller retailers while benefiting monster retailers such as Wal-mart

Currently all bicycle imports into Canada have a 13 percent import duty and some also have a 5-50 percent dumping duty applied. An additional 30 percent surtax against bikes from the Far East, as recommended to the Canadian government by the Canadian International Trade Tribunal (CITT), would have made Canada "the most taxed bicycle industry on the planet," said Guy Bombardier of Cybersport of Vancouver BC, manufacturer of Brodie Bikes.

The CITT recommended that Canada impose a three-year surtax on bicycles with a freight-on-board (FOB) value of $225 Canadian or less. The 30 percent tax would drop to 25 percent in the second year, 20 percent the third and would then be dropped.

The Canadian Bicycle Manufacturers' Association complained to the CITT in 2004, asking it to impose a 48 percent tariff on foreign bike imports in order to stem the flow of lower-cost foreign imports into Canada. According to reports from Procycle Inc. and Raleigh Canada Ltd, imports have almost doubled in recent years to 1,063,768 units in 2004 from 538,523 in 2000.

Surtax critics said Procycle and Raleigh avoid existing tariffs, duties and surcharges by importing most of their bicycle frames and components unassembled into Canada where they then assemble them for distribution.

"Gasoline prices are up, inner city smog and traffic congestion are up, greenhouses gases are up, childhood obesity is up and virtually everyone has identified bicycles as part of the solution. So where is the public interest in a 30 percent import bicycle surtax?

Mike Theil, owner of four Bicycle Sports Pacific stores in Vancouver, said: "It's outrageous that Canadian cyclists, my business, my staff's jobs, the health of our nation and the environment are all up for sacrifice, to bail out two globally uncompetitive businesses that have failed to adapt despite fifteen years of trade protection. They continue to try to compete for the bottom end of the bicycle market in Canada.

"These two companies need to focus on making better bikes, not continually coming back to government for more trade protection. There are many successful Canadian bike manufacturers and they do not need or support this proposed tax."

Diane Brisebois, president and CEO of the Retail Council of Canada said:

"On behalf of all retailers across Canada who sell bicycles and barbecues this is a huge victory for their customers and their businesses. Increasing import surtaxes only drives up costs and drives down product selection for Canadian consumers.

"We want to grow and strengthen our economy, and imposing these surtaxes would have increased costs for both Canadian retailers and consumers.

"For the hundreds of our smaller store owners in these product categories, this is particularly good news.

"It will protect their rights to responsibly source the range of products their consumers are demanding - at the price levels their customers are willing or able to pay."